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Sentiments and spectators: Adam Smith’s theory of moral judgment

Often, those who know something of Adam Smith are tempted by the following three claims: First, that in The Wealth of Nations Adam Smith argues that in a well structured market economy the private pursuit of interest works – as if guided by an invisible hand – to promote the public interest. Second, that in TheTheory of the Moral Sentiments Smith introduces the notion of an Impartial Spectator and appeals to the reactions of such a spectator as setting the standard for our moral judgments. And, third, the Impartial Spectator, properly understood, sets a standard that endorses actions and institutions in proportion as they contribute to the public good or over-all happiness.